RBS in talks to offload stake in Euroclear

The state-backed Royal Bank of Scotland (RBS) is in talks to offload its long-held stake in Euroclear, a financial markets infrastructure group that plays a central role in settling hundreds of trillions of euros-worth of trades.

Sky News has learnt that RBS, which is one of about 130 shareholders in Euroclear, is in advanced talks to sell its interest in the company.

The deal is expected to net at least tens of millions of pounds in proceeds for RBS, which remains more than 70%-owned by British taxpayers nearly a decade after it was bailed out.
Sources said on Wednesday that a transaction was expected in the coming weeks although they pointed out that a successful sale would “not be material” in the context of RBS’s balance sheet.
The identity of the buyer of the stake was unclear, with sources suggesting that it was not one of Euroclear’s existing shareholders – many of which are banks and interdealer brokers.
Euroclear was established in the late 1960s to settle securities transactions in a timely and cost-effective manner.
It has since become an entrenched part of financial markets infrastructure, announcing in July that it had processed €369tn during the first half of the year.
Executives within RBS’s Capital Resolution unit, the division which has been responsible since 2014 for dealing with £28bn of legacy assets, are overseeing the sale of its Euroclear stake.

Image: Euroclear has become an established part of financial markets infrastructure
RBS declined to say how large its shareholding was, with insiders acknowledging only that it was “below 5%”.

If completed, the sale will be the latest in a lengthy tail of assets disposed of by the bank since it was rescued by taxpayers in 2008.
RBS was forced to dispose of Worldpay, the payments processing business, for what critics have since dubbed a bargain basement price.
Its US bank, Citizens, a stake in Bank of China and a big commodities trading operation are also among the profitable assets it was obliged to offload, either for state aid reasons or because its parlous finances required it.
The disposal of RBS’s Euroclear stake comes at a crucial time for financial markets groups, with technologies such as blockchain presenting both threats and opportunities to established infrastructure players.
Euroclear benefited from increased market volatility during the second half of 2016, driven largely by the Brexit vote and the outcome of the US presidential election.
However, it warned in its 2016 annual report that Brexit would create “uncertainty for the Irish marketplace, which we service through Euroclear UK and Ireland”.
“We are working closely with the relevant authorities and our clients, and are very confident that we will deliver a sustainable, long-term solution to this situation.”
RBS and Euroclear both declined to comment.